STV, Scotland's ITV licensee, has reported a 55% fall in pre-tax profits year on year in 2009 as the company struggled to deal with an unprecedented advertising slump that resulted in a 13% fall in broadcasting revenues.

The broadcaster said that in addition to the advertising recession its year-on-year revenue was also affected by the sale of Virgin Radio. A year-on-year comparison of its ongoing business reduces the revenue fall to 17%.

Profits before tax fell from £12.3m in 2008 to £5.5m last year. Operating profit fell by £4m to £9.2m, in line with analysts' expectations. "The board believe the 2009 profit outturn to be a very credible performance in the face of such significant revenue decline," said the company in a statement. Total revenues for the business fell 24% from £144.5m to £110.2m year on year.

Overall STV made a loss of £8.8m last year after tax and exceptional items, an improvement on the £24.7m loss reported in 2008.

"The last year has seen the deepest advertising recession ever experienced by the group," STV said. "The levels of decline in airtime sales in particular, were so severe that despite unprecedented cost reduction measures, profits declined."

Broadcasting revenues were down 13% year on year to £77.8m, with national TV ad revenue down 10% and a 12% fall in the Scottish market. Content revenues halved to £8.1m.

The Pearl & Dean cinema operation, which STV is keen to offload, saw revenues fall 10% year on year and the business made an overall loss of £13m. However, cinema ad revenues in the first quarter of 2010 are forecast to be up 12% year on year, the company said.

STV said that it forecasts the total UK TV market to be up 5% year on year in the first quarter. The broadcaster is predicting that its national TV ad revenues will be up 13% year on year in the first quarter – 15% in January, 8% in February and 15% in March – and up 4% year on year in the Scottish market.

"STV has delivered a strong set of results, particularly in light of the extremely challenging market conditions in 2009, including the demise of Setanta and the delay in ITV's recommission of Taggart," said Richard Findlay, the chairman of STV Group.

"We have, however, concluded the successful turnaround of the business over the past three years, delivering on our promises and establishing STV as a focused and ambitious digital media company, structured to deliver shareholder value as the trading environment improves."

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